CEE MARKETS 3-FX down; Baltic worries still weigh on region

                                
 * FX mixed, Baltic worries still affect CEE
                                
 * Polish bonds gain, Czechs steady after strong auctions
                                
 
  (Adds fresher quote, prices)
                                
 By Jason Hovet and Dagmara Leszkowicz
                                
 PRAGUE/WARSAW, Oct 8 (Reuters) - Central European currencies
were down on Thursday after investors pulled back on lingering
Baltic contagion concerns, with rate cut expectations and
politics hampering the Czech crown and Romanian leu.
                                
 Renewed worries that Latvia's financial woes could impact
the markets of bigger states in Central Europe have grown after
the country's bond auction failed on Wednesday. [ID:nL7616321]
                                
 The Latvian finance ministry said it was working on more
budget reduction measures under pressure from lenders like
Sweden and the European Union. The dispute revived currency
devaluation fears.
 "Latvia's turmoil definitely doesn't help, although the
impact (on the region) is still limited," said Przemyslaw
Winiarczyk, dealer at Millennium bank in Warsaw.
                                
 Adding pressure in Romania is a no-confidence vote for Prime
Minister Emil Boc's minority government next week after his
coalition with the Social Democrats fell apart. [ID:nL7608185]
                                
 Political deadlock there, which could last for months,
raises concern over the future of Romania's 20 billion-euro
($29.4 billion) aid package from the International Monetary Fund
and the government's budget plans for 2010.
                                
 The Bucharest stock exchange <.BETI> dipped as well, while
other central European bourses rose around 0.4-1.2 percent to
track European peers after a surprise quarterly profit for
global aluminium company Alcoa <AA.N>. [ID:nL895582]
                                
 The leu <EURRON=> slipped 0.3 percent to around 4.28 to the
euro by 1349 GMT, while the Czech crown <EURCZK=> fell 0.4
percent - its lowest level since mid-August as expectations for
more easing weighed on the currency.
                                
 "The first trigger was central bank comments (signalling)
the crown was overvalued. The second impulse came from
yesterday's disasterous Latvian T-bill auction," said one
Prague-based dealer.
                                
 Central bank chief Zdenek Tuma and Vice-Governor Miroslav
Singer voted in the minority at the last meeting for a rate cut,
which markets have taken as a signal that rates could go lower
at November's meeting. [ID:nL6352407]
                                
 Elsewhere, in Hungary bonds yields fell some 10 basis points
mostly on the long-end of the curve, after a strong bond auction
that sold 82 billion forints. [ID:nL8186691]. The forint
<EURHUF=> was 0.4 percent weaker, in an illiquid trade.
                                
 Czech bond yields dropped across the curve, aided also by a
strong auction on Wednesday. [ID:nL7618856] Polish bonds were
steady after it had gained on a Wednesday tender that saw demand
at almost three times the offer.
                                
 In Poland, the zloty <EURPLN=> slipped 0.2 percent, with
investors saying the current political turmoil is not helpful
for the currency, even as Finance Minister Jacek Rostowski said
it should not affect the Polish currency. [ID:nWAR008630]
                                
 On Wednesday Polish Prime Minister Donald Tusk ditched three
ministers and sacked the head of an anti-graft body in an effort
to draw a line under a lobbying scandal that has harmed his
centre-right government's image. [ID:nL7354676]
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.813    25.703  -0.43%   +3.64%
Polish zloty     <EURPLN=>   4.248     4.24   -0.19%   -3.13%
Hungarian forint <EURHUF=> 270.6     269.4    -0.44%   -2.61%
Croatian kuna    <EURHRK=>   7.255     7.248  -0.1%    +1.52%
Romanian leu     <EURRON=>   4.279     4.267  -0.28%   -6.18%
Serbian dinar    <EURRSD=>  93.01     92.89   -0.13%   -3.8%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +2 basis points to  159bps over bmk*
7-yr T-bond   CZ7YT=RR    -17 basis points to  +173bps over bmk*
10-yr T-bond   CZ10YT=RR    -12 basis points to  +155bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +1 basis points to  +387bps over bmk*
5-yr T-bond   PL5YT=RR   +2 basis points to  +342bps over bmk*
10-yr T-bond PL10YT=RR   +1 basis points to  +309bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    0 basis points to  +542bps over bmk*
5-yr T-bond   HU5YT=RR   +2 basis points to  +508bps over bmk*
10-yr T-bond   HU10YT=RR +1 basis points to  +456bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1449 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.

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(Reporting by Reuters bureaus, writing by Jason Hovet and
Dagmara Leszkowicz; Editing by Mike Peacock)